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Oil industry finds hot rock resource

Major players in the oil sands, under political pressure to reduce their greenhouse gas emissions, have quietly formed an industry-wide consortium to explore using heat in the Earth's crust as a clean alternative to natural gas.

Major players in the oil sands, under political pressure to reduce their greenhouse gas emissions, have quietly formed an industry-wide consortium to explore using heat in the Earth's crust as a clean alternative to natural gas.

The consortium, called GeoPower in the Oil Sands, or GeoPOS, plans to drill an appraisal well to assess the heat potential of granite rock that lies 500 metres below the Earth's surface. If the required heat levels are found, an "enhanced geothermal system" could be built that supplies the hot water needed for extracting oil from the tarry sands – a job typically performed through the burning of natural gas.

It could also deflate the nuclear industry's hope of building reactors in northern Alberta, an idea being pushed by the federal government and investigated by Husky Energy Inc. and France's Total SA.

"We are a member of the GeoPower consortium," confirmed Shell Canada Ltd. spokesperson Janet Annesley. "Geothermal fits with our principles of sustainable development, in that there's a potential economic benefit, which is reducing our operating costs and dependence on natural gas, and (it) reduces our greenhouse gas emissions."

Brad Bellows, a spokesperson for Suncor Energy Inc., said geothermal energy is "definitely" being looked at as a clean, long-term, and price-protected energy source for oil-sands production.

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The oil sands account for nearly a third of Alberta's natural gas consumption, and the amount used is expected to jump four-fold over the next 10 years as development of the oil sands gathers momentum.

This dependence on natural gas has made the oil sands the fastest-growing source of greenhouse gas emissions in the country. Volatility of gas prices has also caused headaches for oil companies, which are exploring alternatives – including nuclear power – to give them greater price certainty.

Michal Moore, a senior fellow at the University of Calgary's Institute for Sustainable Energy, Environment and Economy, said geothermal energy could be cost-competitive with nuclear power in about 15 years and would only require about $400 million in additional research and development.

Like nuclear and unlike solar or wind power, geothermal provides a constant, predictable source of energy in the form of heat – used directly or to generate electricity. Another benefit is that geothermal energy releases virtually no airborne pollutants and there are no waste-disposal and security concerns like with nuclear power.

It's also Kyoto-friendly. According to Natural Resources Canada, new geothermal facilities emit 0.1 kilograms of carbon per megawatt hour of generated electricity, compared with 185 kilograms of carbon for a coal-fired plant. They also outperform coal and nuclear plants in terms of reliability.

"If you think long term on this, the oil sands are a security issue for North America," said Moore, a former chief economist with the U.S. National Renewable Energy Laboratory and past commissioner at the California Energy Commission.

"To the extent we can diminish the impact of accessing the oil sands, through advanced in situ techniques combined with cutting the reliance on natural gas, it gives Canada a tremendous competitive advantage in the future."

Moore spent the last 17 months as part of an 18-person expert panel, led by the Massachusetts Institute of Technology, looking at the potential for tapping geothermal energy in the United States.

Specifically, the panel studied enhanced geothermal systems that can tap high temperatures up to five kilometres below the Earth's crust. The heat can be used on its own for district heating and oil-sands production, or turned into steam for electricity generation.

"On the whole, this is about as clean a power supply as you're going to get," Moore said.

Geothermal power generation is common in California, Hawaii, Nevada and volcanic countries such as Iceland, where the heat is closer to the surface and easier to tap. Western GeoPower Corp. is the only company developing geothermal power in Canada, at a site about 170 kilometres north of Vancouver.

Geothermal power is generated from heat of 80C to 200C, deep in the Earth's crust, and is not the same as ground-source heat pumps or "geo-exchange" systems, which use constant temperatures just a few metres below the Earth's surface to assist in heating and cooling buildings.

"It doesn't take much extrapolation to show that the deeper you go, no matter where you drill, you will encounter 250-degree temperatures," said Moore, adding that even Ontario could one day be replacing its nuclear plants with geothermal plants. "The power supply should exist just about any place, if you go deep enough."

The MIT-led report, released in January, concluded that there are no technical barriers or limitations to tapping enough heat in the Earth to generate 100,000 megawatts of power-generating capacity in the United States by 2050. Add Canada's geography to the mix and the figure would more than double – roughly equivalent to 200 large nuclear reactors.

Geothermal expert Susan Petty, founder of geopower consulting firm Black Mountain Technology of Seattle, sat on the MIT panel and said Canadian oil companies could easily apply their drilling expertise and geological engineering base to geothermal development in their own backyard.

She urged Ottawa to create its own expert panel that would build on the findings of the MIT group. Having already reached drilling depths exceeding 6,000 metres, where rock is hot enough to produce power, the oil industry is a natural fit for geothermal energy.

"The biggest problems we have right now are not drilling the wells," Petty said. "It's making the fractures (in the rock) that would allow you to extract (heat) energy."

Geothermal plants work by pumping cold water into a deep well and exposing it to the hot rock below. The water absorbs the heat and is pumped back to the surface, where the hot water or steam is used as required.

For this process to work, the rock has to be porous enough so water can flow through it and absorb as much of the heat as possible. If the rock is solid, cracks must be created by pumping water at high pressures and forcing fractures. Petty called technology advancements in this area "amazing."

"When I started on the panel, I thought it was only economic now to do conventional geothermal. But when I looked at how far they'd gotten and how much the technology improved, I was convinced in the end that we could make it economic.

"This isn't as complex as a nuclear plant," Petty added. "We know how to pump hot water, we know how to make holes in the ground, and we know how to use hot water to make electricity. We just need to do it better."

Moore, meanwhile, hopes to publish two papers on the issue in academic journals this fall, after which he'll present his conclusions to the federal and Alberta governments, oil companies and anyone else who will listen.

His thesis: There's plenty of heat three kilometres down and deeper to substitute the use of natural gas in the oil sands.

"Canada is rich in opportunities," Moore said. "All the deep drillers we had who testified and gave information to the panel suggest this is workable, but you won't know if it works until you try it."

Both Moore and Petty said the first couple of geothermal plants will be expensive – as were the first oil wells ever drilled – but the costs will fall as lessons are learned. Besides, they added, it's not as if nuclear plants, "clean coal" projects or other choices are any cheaper.

For example, Sherritt International Corp. and the Ontario Teachers' Pension Plan recently outlined plans for a gasification facility southeast of Edmonton that would convert coal into synthetic gas for use in the oil sands. It will take at least five years to build at a projected cost of $1.5 billion.

Whatever the chosen approach, it has become increasingly clear to some in the oil sands that something must be done. Daniel Yang, a reservoir engineer with Shell Canada, told an audience last month at a geothermal conference in Potsdam, Germany, that planned multi-billion-dollar expansions of oil-sands projects must address the issue of rising gas consumption and carbon-dioxide emissions.

In an abstract of his presentation, Yang wrote that tapping the Earth's heat is an "ideal opportunity" because profitability of geothermal is "of secondary importance" in the face of rising environmental concerns. "Any level of heat supply is a success," he concluded.

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